Meta faces European Union probe over Facebook and Instagram addictive design features

Market Commentary

South African Market Summary

South African equities advanced on Friday, with the JSE All Share gaining 0.79% to 110,355.39 points and the Top 40 rising 0.65% to 101,976.67. Corporate developments included Old Mutual’s planned migration from the Zimbabwe Stock Exchange to the Victoria Falls Stock Exchange, while Telkom committed R100 million to an artificial-intelligence institute focused on strengthening digital skills. Sentiment was also supported by a more constructive domestic growth outlook. Standard Bank chief economist Goolam Ballim said improvements in governance and critical infrastructure were beginning to unlock economic momentum after a decade of sub-1% average growth. He forecasts expansion of 1.7% in 2027 and 2% in 2028, exceeding the IMF’s 1.3% estimate for next year and reinforcing expectations of a gradual structural recovery.

European Market Summary

European equities ended a four-week winning streak as technology weakness and renewed Middle East tensions pressured risk appetite, leaving the STOXX 600 down 1.8% for the week. Energy-market volatility and uncertainty surrounding the NATO summit added to concerns over inflation, trade policy and regional growth. Attention now shifts to the earnings season, where company fundamentals may determine whether momentum can resume. ArcelorMittal gained 6.4% after JPMorgan upgraded the steelmaker to neutral, reflecting a more constructive sector view. Ryanair closed 0.9% higher despite an emergency landing following a cabin-window incident. Volkswagen extended losses after labour representatives reportedly blocked a restructuring plan, while second-quarter global vehicle deliveries fell 8.6%, the sharpest quarterly decline in four years, underscoring persistent operational and demand pressures.

US Market Summary

The S&P 500 finished Friday just below a record high as SK Hynix’s blockbuster Nasdaq debut revived enthusiasm for artificial intelligence and memory-chip exposure. The South Korean semiconductor group closed 13% above its $149 offering price at $170 after raising more than $26 billion through American Depositary Receipts. Sentiment also improved after President Donald Trump said Iran had requested further talks, although renewed hostilities continue to threaten energy markets and inflation expectations. Attention now turns to second-quarter earnings, with analysts forecasting 24% year-on-year growth for S&P 500 companies, led by technology. Despite near-record index levels, the forward valuation has eased to roughly 20 times earnings. Upcoming US inflation data and Federal Reserve Chair Kevin Warsh’s testimony will shape rate expectations.

Asian Market Summary

Asian equities declined as escalating conflict in the Gulf and Iran’s closure of the Strait of Hormuz weakened risk appetite and heightened concerns over energy supply, inflation and global growth. In Japan, policy signals around the ¥1.8 trillion Government Pension Investment Fund supported the yen and bonds, after authorities indicated a desire to increase allocations to domestic assets and alternatives. The shift could strengthen local capital markets while reducing overseas exposure. In China, June exports are expected to have risen 18.2% year on year, easing from 19.4% in May but remaining robust as manufacturers accelerated US-bound shipments ahead of potential tariffs, benefited from artificial intelligence demand and competed on price. Geopolitics, energy costs and trade policy remain key regional risks.

Currency Market Summary

The South African rand firmed modestly in early trade as broad dollar softness supported risk-sensitive emerging-market currencies, although renewed Middle East hostilities continued to constrain investor confidence. The currency remains highly exposed to shifts in global risk appetite following the escalation involving the United States, Israel and Iran. Safe-haven demand later lifted the dollar index to 101.13, while renewed concerns over disruption to the Strait of Hormuz increased inflation and interest-rate uncertainty. Investors will focus on forthcoming US consumer and producer inflation data, alongside Federal Reserve Chair Kevin Warsh’s congressional testimony, for guidance on the global rate outlook. Elevated energy prices, geopolitical volatility and changing expectations for monetary policy are likely to remain the principal external drivers of rand performance.

Commodity Market Summary

Gold fell more than 1% as renewed military escalation between the United States and Iran drove oil prices sharply higher and revived concerns over inflation and prolonged restrictive monetary policy. Crude gained over 4% amid renewed threats to energy shipments through the Strait of Hormuz, a critical conduit for global oil flows. Although the International Energy Agency reported that global supply increased by 4.1 million barrels per day in June, output remained 9.4 million barrels per day below pre-war levels, underscoring persistent market tightness. For gold investors, the pressure reflects rising real-yield expectations and reduced prospects for near-term rate cuts, despite heightened geopolitical risk. Further escalation, oil-price persistence and central-bank responses will remain key determinants of bullion performance.

Domestic Company News

Brait plc (BAT) -0.48%

Brait has released its FY2026 Integrated Annual Report, including the consolidated financial statements for the year ended 31 March 2026, providing shareholders with the principal disclosure document for assessing the group’s financial position, portfolio performance and strategic outlook. The company will hold its annual general meeting in Mauritius on 6 August 2026 at 11:00 MUT, equivalent to 09:00 SAST. Shareholders wishing to participate and vote must note the last day to trade of 28 July and the voting record date of 31 July. Proxy forms should be submitted by 4 August. Investors unable to attend physically may join the question-and-answer discussion, subject to prior registration. The AGM outcome will be published on 6 August, following completion of the formal proceedings.

Accelerate Property Fund Limited (APF) -3.92%

Accelerate Property Fund expects a marked recovery in distributable earnings for the year ended 31 March 2026, following ongoing restructuring initiatives and an insurance settlement. Distributable earnings are forecast at between R40.1 million and R47.3 million, equivalent to 1.96 cents to 2.31 cents per share, compared with a distributable loss of R71.3 million, or 3.97 cents per share, in FY2025. Despite the improvement, the REIT will not declare a distribution for the current period, citing projected working capital needs, cash flow requirements and planned capital expenditure. No distribution was declared in the prior year. The corrected trading statement replaces the announcement issued on 9 July 2026. The figures remain unaudited and have not been reviewed by Accelerate’s independent external auditor.

Global Company News

Delta Air Lines Inc. (DAL) -1.81%

Delta Air Lines reaffirmed its 2026 adjusted earnings guidance of $6.50 to $7.50 per share and issued a stronger-than-expected third-quarter outlook, supported by resilient demand and fare increases introduced during the fuel-price shock. Third-quarter adjusted earnings are projected at $2.00 to $2.50 per share, versus the $2.02 analyst consensus. Second-quarter adjusted earnings fell 26% to $1.56 per share, but exceeded expectations of $1.48. Delta recovered approximately 60% of higher fuel costs during the quarter, despite recording a record $4.4 billion fuel expense. Management expects pricing momentum to persist as industry costs remain elevated, although renewed fuel volatility and fourth-quarter capacity growth remain key risks. Investors will closely monitor post-summer demand and competitors’ pricing discipline across the broader US airline market.

Meta Platforms Inc. (META) +5.97%

Meta Platforms faces regulatory risk after the European Commission preliminarily found that Facebook and Instagram breached the Digital Services Act through addictive design features. Regulators criticised autoplay, infinite scroll and highly personalised recommendations for encouraging excessive use, particularly among younger users, and urged Meta to disable features by default, strengthen screen-time interventions and reduce engagement-driven recommendations. Meta disputes the findings, citing Teen Accounts, parental controls and safety measures. The company can respond before a final ruling, but non-compliance could expose it to fines of up to 6% of global turnover. The investigation adds to mounting scrutiny in Europe and the United States, increasing the prospect of product redesign costs, lower engagement and greater compliance burdens across Meta’s core advertising platforms.

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